Bitcoin (BTC) is getting most of its price support from the Federal Reserve itself, entrepreneur Tyler Winklevoss believes.
In a tweet on Aug. 25, the Gemini exchange co-founder argued that Fed policy is and will continue to bolster Bitcoin’s fortunes.
Inflation boost is a Bitcoin boost
The reason, Winklevoss said, is that the fallout from coronavirus containment measures across the United States’ economy will mean that the central bank accidentally makes Bitcoin more appealing and the dollar less so.
On Thursday, Fed chairman Jerome Powell will deliver a speech that commentators expect will contain an announcement on letting inflation rise dramatically.
This alone makes Bitcoin, which has a fixed unalterable issuance and supply, instantly attractive.
“The Fed, under the leadership of Jerome Powell, continues to be Bitcoin’s biggest booster,” Winklevoss wrote.
“On Thursday, he will deliver a speech about how the Fed will begin targeting higher inflation.”
As Cointelegraph reported, anticipation around the Fed inadvertently plugging safe havens such as gold and Bitcoin has been building as both assets see price surges in line with rises in central banks’ balance sheets.
Earlier this month, Edward Yardeni, president of Yardeni Research, said that heightened inflation targets would be “wildly bullish” for precious metals.
Bitcoin price, inflation and stock-to-flow chart. Source: Woobull
More years of 0% interest rates
Meanwhile, Bloomberg reports that interest rates should remain near zero for five years, with the potential for longer periods not ruled out.
That would mimic behavior following the 2008 Global Financial Crisis, which saw rates kept unchanged at near 0% until the end of 2015.
“I wouldn’t be surprised if interest rates are still zero five years from now,” ex-chief White House economist Jason Furman told the publication.
Fed interest rate historical chart. Source: Bloomberg
The Fed has so far steered clear of negative interest rates, diverging from a practice that has been present under the auspices of the European Central Bank (ECB) for several years.
In May, a report argued that Bitcoin was a natural focus for fund managers aiming to mitigate the impact of such a financial policy.